Can Investors Really Help Entrepreneurs With Their Product?

There is s dearth of great venture capital or seed stage investors that are really strong "product people". That said, I've heard investors claim to be "product guys" all the time. Many have never had any involvement in designing or launching a real internet product, but I guess entrepreneurs just have to take their self assessment at face value.

What does it mean to an entrepreneur to have a really great "product person" as an investor? I think there are a few universal characteristics, and some qualities that differ depending on whether your product oriented investor is more of a POET or LIBRARIAN (see my prior blog post).

Universal Stuff:

A great product oriented investor should be willing to see crappy, early drafts of product. You must not be worried about getting feedback on early drafts, mockups, etc. They should be comfortable watching how the sausage is made, and see incomplete work and be helpful in the process. They should be comfortable with an iterative process, and in fact, will probably push you to test, iterate, and adjust faster.

A great product oriented investor should be working to become a native in your space. It helps if he or she is fluent in some of the underlying technology platforms that you are working with. This isn't an age thing. This stuff can be learned, but some areas are easier than others. I'm probably a terrible product guy when it comes to music-related services because I actually don't spend much time in that space and I have very mainstream musical tastes. I could always learn, but then again, there are others that are more "native" and thus, probably way more helpful.

How Poets Can Help:

Some investors just have a wonderful intuition about where the internet is going and how web services are going to evolve. This makes them a very valuable sounding board when it comes to very difficult calls that you have to make about the product when presented with little or no data.

Related to that, these investors also know when to respect data and when to question it. They are humble enough to know when their instincts about a product should be super-ceded by data from a test. But at the same time, provide a contradictory perspective when they think the data is misleading or that the entrepreneur is focused on optimizing the wrong vector.

How Librarians Can Help:

Investors who are great product folks with a Librarian bent are very helpful in thinking through the process of building a great product and engineering team. How to hire and grow? How to prioritize features? How to get the right user feedback in the right way at the right stage for the company? All great ways a product oriented investor can help.

Librarians are also great at helping you think through the metrics you should be using to manage the product and what metric you should be most focused on at a given time. It's easy for an entrepreneur to be overwhelmed with the data they are gathering, and it's helpful to have an experienced person on your side thinking through what your KPI's should look like and how to invest your limited engineering resources to build the most company value.

Overall, investors can only be so helpful on the product front. They aren't designing the product themselves, after-all. But at minimum, you want to have an investor that is a good sounding board on product decisions. It's a lonely place to be as a founder when you are searching for product-market fit and don't feel like you have many peers beside you in the process. I'd love to hear feedback on how investors have been helpful (or not helpful) to entrepreneurs in developing their product.